The crypto market is in freefall — and while price drops often leave analysts scrambling for explanations, this time the cause is clear: Donald Trump’s newly announced global tariffs.
The Tariff Shock That Shook the Markets
In a surprise move, Trump unveiled sweeping trade restrictions, including a flat 10% tariff on all imports, with significantly higher rates for key economies like China. The new policy pushes total tariffs on Chinese goods to over 50%, sparking fears of inflation, supply chain disruptions, and even a potential global recession.
The announcement triggered a wave of panic across global financial markets:
- Japan’s Nikkei 225 dropped as much as 4%, ending down 2.77%
- European indices slumped, with London’s FTSE 100 down 1.5%, and Paris, Frankfurt, and Milan falling more than 2%
- On Wall Street, the S&P 500 opened down 3.4%, and the Nasdaq 100 sank 4.1%
Crypto Tumbles With Tech
Due to its 24/7 nature, crypto was among the first markets to react. Bitcoin plunged from $88,466 to $82,182, a peak-to-trough loss of nearly 7%.
While Bitcoin held up relatively well, altcoins suffered more:
- Ethereum (ETH): down 11%
- XRP: down 13%
- Solana (SOL): down 17.5%
The crypto decline is closely linked to the tech sell-off — as Bitcoin has been trading in lockstep with risk-on assets like the Nasdaq.
What Do Trump’s Tariffs Mean for Crypto?
The broader implications of these policies are just beginning to unfold. As other countries consider retaliatory tariffs, currency volatility is accelerating.
One immediate effect has been a sharp decline in the U.S. dollar index, which is now at its weakest level since October 2023. The dollar has also fallen to a six-month low against the British pound.
According to CoinGecko, this could actually support Bitcoin in the medium term:
“When the dollar weakens, Bitcoin often strengthens… much like gold, BTC serves as a hedge against fiat currency instability.”
However, this bullish thesis may take time to play out. The current market panic — especially in U.S. equities — is far more likely to weigh on crypto prices in the short term.
Sentiment Tanks, Recession Fears Rise
On Polymarket, a decentralized prediction platform, the probability of a U.S. recession in 2025 surged to 53% following Trump’s announcement. Meanwhile, the CME FedWatch Tool showed that rate-cut expectations for May jumped from 10.6% to 27.3% in a single day.
If the Federal Reserve moves to cut rates, it could inject new liquidity into the system, potentially benefiting risk assets like Bitcoin. But until then, volatility is the name of the game.
Can Bitcoin Hold the $80,000 Level?
The key short-term question: Can BTC hold above the $80K psychological threshold, or will the sell-off deepen?
Despite the panic, well-known Bitcoin advocates like Samson Mow and Michael Saylor remain upbeat, doubling down on BTC’s long-term value proposition.
But with market sentiment deep in “Extreme Fear” and no clear bullish catalyst on the horizon, Q2 could be rocky.
